Following the annual Christmas parade in the city McRae, GA, the operator and passenger of a mule-drawn cart, both covered by their own respective policies through Georgia Farm Bureau Mutual Insurance Co., were were struck from behind by a vehicle built with more modern technology. Georgia Farm Bur. Mutual Ins. Co. v. Claxton, A18A0737, 2018 WL 1573032, (Ga. Ct. App. April 2, 2018). The passenger in the carriage sued the carriage operator to recover for his injuries in the crash. Georgia Farm Bureau then filed a declaratory judgment arguing it owed no coverage under either of the policies. The court of appeals disagreed and held that a jury had to decide two factual questions in order to determine whether coverage existed.

On the first coverage issue, the insurer argued that the policy explicitly excluded coverage for the passenger’s injuries because the mule-drawn carriage operator was providing transportation with, “[t]he use of any livestock or other animal, with or without an accessory vehicle, for providing rides to any person for a fee or in connection with or during a fair, charitable function, or similar type of event[.]" Georgia Farm Bureau argued that the accident occurred “in connection with” the Christmas parade, of which the mule-drawn cart had just been involved and thus owed no coverage. The court of appeals disagreed and held that a jury had to decide two factual questions in order to determine whether coverage existed:

First, because the policy excluded coverage for “similar types of events” to fairs or charitable functions, a jury would need to decide whether the town Christmas parade was similar enough to justify the exclusion.

Second, because at the time of the accident the parade had ended, and the operator was simply giving a passenger a ride back to his car, a jury would need to determine whether the accident occurred “in connection with” said excluded events listed above.

Taken together, because these two issues were factual in nature, the court of appeals affirmed the lower court’s denial of summary judgment on the operator’s insurance policy.

Notably, even though the court of appeals affirmed the lower court’s ruling on the operator’s policy, it rejected the reasoning. The lower court held that the “for a fee” language applied to the entire exclusionary clause and since the operator was simply providing a ride for free the exclusion was inapplicable. However, the court of appeals found the lower court incorrectly interpreted the exclusion because the actual policy language stated, “for a fee or in connection with . . .” and therefore gave rise to the factual questions described above. (Emphasis added).

The policy’s exclusion of coverage when charging a fee is known as the “livery exclusion” in auto insurance policies. However, not all fee-based ride services will trigger this exclusion. For example, in the San Francisco Bay Area, many drivers pick up passengers on their way into the City in order to take advantage of the carpool lanes during commute hour. Drivers charge a nominal fee, usually enough to cover the bridge toll, pick up passengers at designated locations throughout the East and North Bay, and drop off in one location in downtown San Francisco. This ad-hoc, community-based system, informally known as “casual carpool,” has been around for decades. Furthermore, most auto insurance policies explicitly allow for drivers to participate in casual car pool. This exception to the livery exclusion should not be interpreted to cover other ride-sharing services, so drivers who work for Lyft or Uber would almost certainly need additional insurance.

Finally, back to our Georgia mule case, the court of appeals did reverse the trial court and granted summary judgment to the insurer on the Uninsured motorist claim by the mule-drawn carriage’s passenger because he was not riding in a “motor vehicle” as defined under the insurance policy. For one, the cart was not a “land motor vehicle” and did not qualify as a “trailer” under the policy because, “in order to qualify as a trailer that can be considered an uninsured motor vehicle, the vehicle must be designed in such a way that it can be pulled by private passenger autos, pickups, or vans.”

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